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Does life insurance pay for a funeral?

The process of organising a funeral is a difficult time for anyone following the loss of a loved one. It can be equally difficult thinking about our own funerals and arrangements for after we are gone.

The main concern will often be how to afford something like a funeral, with the average cost of a UK funeral being around £4,216 according to insurance provider Legal & General.

Life insurance is a great way to ensure your loved ones don’t struggle to cover the cost of your funeral. Depending on the level of cover you choose, they could even repay debts, cover mortgage payments and more.

In this page, we’ll discuss your frequently asked questions about funerals and exactly how you can use your life insurance policy to pay for your funeral.

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60-Second Summary – Guide to Does Life Insurance pay for Funeral costs?

One of the Top 5 reasons for people in the UK taking out Life Insurance or Over 50s Life Insurance is to help their loved ones to fund expensive funeral costs. In this guide we’ll look at how a life insurance policy can contribute towards or even fund the total of funeral expenses which can cost £1,000s.

  • Funeral expenses has consistently been one of the Top 5 reasons for consumers taking out Life Insurance and Over 50s Life Insurance policies, now more than ever before with the increasing costs of funerals in the UK.
  • Losing a loved one is traumatic for any family and can be compounded by having to fund the ever increasing costs of funerals in the UK.
  • Life insurance policies can also be specifically designed for funding funeral expenses (e.g. Over 50s Life Insurance or Funeral Plans) which have inflation protection built in and can be pre-assigned to a specific funeral director or to your wishes.
  • Funeral costs can vary dramatically depending on your location (where in the UK that you live) and the type of funeral that you have asked for (e.g. burial or cremation).

On average, a funeral will be around 2 weeks after the person has died. This can vary though for several different reasons. Common reasons for a funeral to be more than two weeks after a death include:

The person hasn’t left any funeral plansIf the person who has died did not have a funeral plan, it can take longer to decide on things such as where the burial should be, which funeral director to use etc.
The funeral director isn’t available immediatelyIf the funeral director is very busy, there may be a slight delay in when the funeral can take place
Further investigations e.g. post mortems are neededSometimes depending on how the person died further investigations could be necessary before the funeral can take place
Struggling to afford the funeralCost can be a big factor when it comes to funerals. Without life insurance or a funeral plan, the deceased’s family may need more time to get the funds needed to pay for the funeral.
Religious beliefsSome religions have rules and processes about funerals meaning funeral services must take place sooner or later than the average 2 weeks.

It is never nice to hear someone you know has passed away. There are a few different ways you might hear this news:

  • You could be contacted by a friend or family member of the deceased
  • You see a death announcement online (e.g. on social media)
  • You see a death announcement in the local newspaper

After hearing of someone’s death the next question will likely be around when their funeral will be. Generally, you will find out when a person’s funeral is:

  • Through an announcement online or in a local newspaper
  • Through speaking face-to-face with a relative or friend of the deceased
  • Over a phone call or message from the person organising the funeral

Average Cost of a funeral in the UK

YearAverage Cost
2012£3,087
2022£4,216
2032£5,832 (estimated)
* According to statistics provided by Legal & General

If you have heard someone you know may have passed away, you can check local death announcements if you are unsure how to contact the deceased’s family.

A death announcement is a public record that will most often be found in a local newspaper, but you may now see them posted and shared on social media. These announcements will include details such as:

  • The name, date of birth and date of death of the person who has died
  • Information about the funeral (time, date, location etc.)
  • Any other information e.g. no flowers at the funeral
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Usually, funerals in the UK will be held on a weekday – though it is possible to have funerals on a Saturday or Sunday. This is because availability for things such as cemeteries, burial services, funeral homes/services etc will be easier mid-week.

Organising a funeral

The process of organising a funeral can be very emotional and is not the easiest thing to do. In some cases the process may be slightly easier, if the person who has died has set plans in place such as pre-paid funeral plan.

If organising a funeral, you will need to register the person’s death before moving on to contacting the funeral director. A funeral director will not be able to make any arrangements until the death has been properly registered.

You will then need to make other arrangements like contacting the council to arrange a burial plot or cremation. Then you will need to contact your place of worship (if you want to have a religious ceremony) and organise things such as flowers and a wake.

There is a lot to think about during this time but luckily Gov.uk has a step-by-step guide on their website you can check to be sure you have covered everything.

YES – In fact this is the main purpose of many life insurance policies, as your loved ones will receive a cash lump sum in the event of your death.

Most policies including family protection, whole of life cover and guaranteed life insurance will be designed to help your family cover your funeral costs. Paying for your funeral is often the main reason people will choose to take out a life insurance policy.

The main exception to this is mortgage life insurance (decreasing term life insurance), which is specifically designed to pay off your remaining mortgage balance if you die. In most cases, there won’t be any additional funds left to cover your funeral after this.

If you need advice about which policy will be right for you, speak to one of our skilled life insurance EXPERTS. With over 20 years expertise, we can advise you on the right level of cover for your needs. With the right advice, you can have peace of mind, knowing you won’t be paying more than you need to be.

Resources

Gov.uk – Get help with funeral costs (Funeral Expenses payment)

Citizen’s Advice – Arranging a funeral

Citizen’s Advice – What to do after a death

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Is it worth paying for life insurance?

Yes, if you’ve got children or financial dependents then you should have life insurance to protect them if you die. Martin Lewis and the Financial Conduct Authority recommend that you take out life insurance to protect your family and your home. Generally, life insurance premiums start from as little as £5 per month and will be cheaper for younger adults.

Common myths about life insurance:

  • Life insurance won’t pay out (pays out 98% of claims)
  • People with medical conditions can’t have life insurance
  • Life insurance is expensive
  • Savings can be just as effective as life insurance
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What is the average cost of life insurance per month?

Based on recent research carried out, the average cost of life insurance is approximately £38 per month and the average level of cover is £152,000. Life insurance premiums also vary dramatically from one insurance provider to another and you can reduce your monthly premiums by shopping around.

Fundamentally, life insurance premiums vary depending on your age, health and the amount of cover that you need, starting from as little as £5 per month. You can also get life insurance to protect your family and your home against financial loss if you die.

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What does life insurance cover you for?

Life insurance is a monthly renewable ‘term insurance’ contract that pays out a cash lump sum or regular payments on death to your family or beneficiaries. Policies are most commonly used for family protection or mortgage protection for your loved ones if you die and your household income reduces, plus the additional issues of losing a parent or carer.

Traditional life insurance will not exclude any pre-existing medical conditions and will cover suicide after 12 or 24 months. You can also use life insurance for business protection purposes as well as tax-efficient business life insurance for directors or key people.

What are the disadvantages of life insurance?

The biggest and most common problem that consumers have with life insurance is the cost and the monthly premiums. This is the top reason for policy cancellations and why more people don’t take out life insurance to protect their family.

Another key disadvantage with life insurance is that it holds no investment value, nor can you cash it in. Life insurance works like any other traditional general insurance policy (e.g. car insurance, house insurance, pet insurance etc.), you pay a monthly premium and it will pay out in the event of a claim. Some people decide to use savings instead of taking out life insurance but you need to make sure that you have sufficient savings to cover the costs of death for your family.

Why do I need life insurance?

The fact is that nobody actually ‘needs’ life insurance, but it is strongly recommended that families and couples have cover to protect their loved ones in the event of death. Martin Lewis recommends life insurance and says “this is something that every parent, partner, or person with any other type of dependent needs to consider”.

Life insurance financially protects your loved ones if you die and pays out a cash lump sum to repay your mortgage, pay for school fees, replace lost income, and pay for regular outgoings. Mortgage life insurance is not linked to your mortgage debt so you can use it to pay off some or all of your mortgage.

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